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Secretarial Audit

Companies Act 2013 Compliance Checklist for Audit

A Compliance audit is a part of an organisation's overall compliance management. Noncompliance may be detected and remedial steps taken using this powerful tool for business compliance management.

Complex laws, rules, & regulations control the business sector. Rules and regulations are necessary, but only if they are well implemented. It is one of the steps that ensure complete compliance. An expert may perform the Compliance Audit to assure the Company’s transparency, ethics, and responsible governance. Secrecy audits are covered in detail in this article by the companies act 2013 with the compliance audit. Read more to know about Companies Act 2013 Compliance Checklist for Audit.

The newly adopted Companies Act, 2013 introduces the concept of a “Compliance Audit for Company.” Verifying that the Company has complied with all applicable corporate laws, rules, regulations, processes, and more is a practice. It is a way to ensure that the specified rules and procedures are being followed. 

An organisation’s compliance procedure has to be examined regularly to catch faults and blunders. Hundreds of laws, regulations, and regulations must be followed by every business. The consequences of non-compliance with these regulations would be severe for the firm. To determine whether and to what degree the firm has complied with relevant regulations, it is necessary to regularly review the Company’s records. 

Regulators, stakeholders, and management may feel confident that the organization is taking a systematic approach to risk management, control, or governance procedures.

Companies Act 2013 Compliance Checklist for Audit

According to the 2013 Companies Act, a compliance audit reviews the Company’s adherence to different statutes and other laws. In an audit known as a compliance audit, the Auditor expresses an opinion.

To see whether the Company’s systems and procedures are adequate for its size and scope of activities. In addition, it ensures that all relevant laws, rules, regulations, or standards are being observed and followed.

An organization with at least 50 crores of fully repaid equity or revenue of 250 crores or more must be publicly traded.

A Compliance Audit is required for any private firm that is a unit of a public corporation that fits into the three criteria.

Is There Anybody Who Can Serve As A Secret Auditor?

When conducting a Compliance audit and providing the firm with the audit report, only a corporate secretary in practice (ICSI) member may do so.

Appointment Of The Secretary Auditor

If a resolution is approved at a board meeting, it must be registered within 30 days with the Registrar of Companies, in E-form MGT-14, as mandated by Rule 8 of the 2014 Businesses (Meetings of Boards and its functions) Rules. The Company’s letter of engagement is highly recommended for a Secretarial Auditor Process.

The letter of marriage should be accepted in writing by the Secretarial Auditor. As a safe business practice, it is recommended that the Board of Directors notify of any changes inside the Secretarial Auditor throughout the year. Provisions in the Companies Act, 2013- governing Secretarial Audit are critical. The essential aspects of the Secretarial Audit are as follows:

  • Secretarial Audit topics to be discussed.
  • Secretarial Audit’s Purposes and Objectives.
  • Preparation of the Certificate of Compliance.
  • Re-checking records and papers for accuracy.

As Of 2013, The Business Corporations Act

  • SEBI established a set of guidelines.
  • Others’ laws.
  • During the Secretarial Auditing period.
  • The Secretarial Auditors have been disqualified.

This Audit’s Main Benefits Include The Following:

  • To ensure the owners’ confidence, it demonstrates that all applicable laws and regulations carry out the Company’s management and affairs.
  • Professional discipline or self-regulation may be enforced with the help of this tool.
  • Regulators’ workloads are reduced owing to more timely and accurate compliances.
  • Investors may use the legal papers to navigate their way around the Company.

The 2013 Companies Act Performs Compliance Audits In The Following Manner:

  • A Secretarial Auditor Has Been Appointed
  • Messages to the previous Incumbent
  • Secretarial Auditor Acceptance of Appointment
  • Talks with the Secretarial Auditor regarding the Company’s operations
  • Preliminary Auditors’ Meeting
  • Finalising the audit strategy and educating the team
  • Interview and analysis of test results
  • Creating the Project Documentation

The Following Are The Necessary Papers For A Secretarial Audit:

  • Statutory Registers and MOA, AOA,
  • Attendees’ Attendance Records for Board of Directors and General Meeting
  • Secretarial audit report & financial accounts audited from the previous year,
  • Filings and Intimations with the ROC, Stock Exchanges, and Newspaper Ads if the Company is listed.
  • These are examples of annual performance reports, deeds, bonds, and returns.
  • Labour laws keep records.
  • Account information for dividend payments
  • Reimbursement and fees paid to the board members by the Company.
  • Details about the CSR
  • Disclosements made by SAST
  • Returns on External Commercial Loans, if applicable.
  • A law that is subject to Secretarial Audit
  • Legislation about the application of Secretarial Audit may be found here. When performing a Secretarial Audit of a corporation, auditors often consider these Acts.
  • As of 2013, the Business Corporations Act
  • Depository Act of 1996
  • Sarbanes-Oxley Act of 1956, or Sarbanes-Oxley
  • According to the legislation mentioned above, rules and regulations have been established.
  • Rules and guidelines issued by Federal Emergency Management Agency (FEMA) in 1999
  • Foreign Direct Investment (FDI) (Foreign Direct Investment),
  • Direct investment from abroad (ODI)
  • The European Central Bank (External Commercial Borrowings).
  • The SEBI Act of 1992 established several rules and guidelines.
  • The Certificate of Compliance issued by the Companies Act, 2013,

A Practicing Company Secretary may provide a Secretarial Compliance Certificate based on the Company’s receipt of specific papers within a particular fiscal year.

A Secretarial Compliance Certificate is a Secretarial Audit created by a Secretarial Auditor by the 2013 Companies Act. While writing an Independent Secretarial audit, the Auditor should include a section titled “Compliance Audit.”

Complaince Audit Reports Must Also Include Information On The Following:

Executive, non-executive, and independent board members make up the proper composition of the Company’s board. Board composition adjustments during this time were made per the Act’s rules.

At least six weeks in advance of the meeting, the agenda and comprehensive notes on the agenda were distributed to all directors, and a mechanism is in place for them to request and get more information or clarifications just on agenda items, as well as for them to participate fully during the meeting. 

The majority’s decision is carried out while the opinions of the opposing members are noted in the minutes. Systems and procedures are in place at the organisation appropriate for its size, scope, and activities to verify and analyze compliance with relevant laws, rules, regulations, and guidelines. 

According to the laws mentioned above, rules, and regulations, the Secretarial Auditor must also report and offer specifics on particular events and acts that happened during the reporting period and significantly affected the Company’s operations. 

The structure of an audit report was also offered as an example in a few instances. Regarding financial rules such as tax and customs legislation, the Secretarial Auditor might depend on the reports provided by Audit Committees or other certified professionals to make their decisions.


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